Divorce: How Can Retirement Savings Accounts Be Handled Fairly?

In a recent ruling, the Court of Cassation clarified how retirement savings contracts should be handled in the event of a divorce, particularly when they were funded with the couple’s joint assets. This decision sheds light on an often-overlooked aspect of matrimonial property regimes, one that can have significant financial consequences.
 

A retirement savings contract remains personal property
In the typical situation of a married couple under the community property regime, one spouse opens a retirement savings plan (PER) and contributes to it using the household’s joint income. When the couple divorces, several questions arise: Who owns the retirement plan? If the contract is in the name of only one spouse, can the other spouse claim compensation?
The Court of Cassation ruled that the retirement savings contract remains the personal property of the policyholder, which seems intuitive given the very nature of this type of product. However, the Court distinguishes between the legal ownership of the contract and the economic value it generates.
 

The Concept of “Compensation” for the Marital Community
Despite this principle of personal property, the Court clarified that compensation must be paid to the marital community for amounts paid into the contract from joint funds. This “reward” is based on Article 1437 of the Civil Code, which stipulates that a reward is due when joint funds are used to pay a spouse’s personal expenses.
 

In other words, although the contract remains personal, it must be viewed from an economic perspective, taking into account the community funds that financed it. This approach is consistent with the way the Court treats other financial contracts, such as life insurance contracts, in similar contexts.
 

Unresolved Questions
However, some questions remain. The ruling does not specify whether the compensation should be calculated based solely on payments made during the marriage or whether it should reflect the present value of the contract at the time of the divorce, which could pose difficulties due to fluctuations in value, including downward trends.
 

Precautions to Take When Opening a Contract
To avoid future disputes, certain precautions can be taken when opening a retirement savings plan. Ideally, it is best to fund your own contract with money that does not come from the marital community, such as funds received as a gift. However, such cases are relatively rare.
 

A more common solution is to open a retirement savings account in each spouse’s name and contribute equally to both accounts. This greatly simplifies the division of assets during a divorce by avoiding any disputes over how the invested funds are allocated.
 

This decision by the Court of Cassation marks an important step toward clarifying how retirement savings accounts are treated in the context of a divorce. Although a retirement savings account remains personal property, spouses would be well advised to be mindful of the source of the funds used to contribute to it. By taking certain precautions when opening the account, they can prevent disputes and facilitate the division of these assets in the event of a separation.
 

Judgment of October 2, 2024 (1st Civil Chamber, No. 22-20.990),